Did you know that Paraguay is not only an attractive tax destination but also a country with real opportunities for those seeking a fresh start? The process of how to obtain residency in Paraguay should not be complicated, but it is essential to understand the different options and advantages this country offers to foreigners.
When we talk about Paraguay, we are referring to a country that operates under a territorial tax system, where you only pay taxes on income generated within Paraguay. This means that if you have income from abroad, Paraguay doesn’t tax it at all.
Additionally, living in Paraguay as an expatriate has its charms: a low cost of living, growing cities, and an expanding expatriate community. With all of this, moving to Paraguay makes sense not only for your wallet but also offers a quality of life that many other tax destinations cannot match.
Whether you are looking to start a business in Paraguay, establish a company, or simply obtain residency as a foreigner, Paraguay has a clear system with options for both temporary and permanent residency. If you are an investor, here’s the interesting part: with a minimum investment in a local business, you can apply for permanent residency for investors and settle down in the country for good.
So, if you are tired of dealing with suffocating tax systems and prefer an environment with low taxes and greater financial freedom, I invite you to keep reading. Because Paraguay could be exactly what you are looking for.
Indice del artículo
Residency Options in Paraguay: Choose What Best Suits You
If you are considering making Paraguay your new home (or at least your tax refuge), the first step is to understand the residency options. Paraguay offers you a couple of paths, and both are simpler than you might think: temporary residency or jumping straight into permanent residency?
Comparison: Temporary Residency vs. Permanent Residency in Paraguay
Temporary residency is the option for those who are still testing the waters. With it, you have two years to see if Paraguay is really the place you want to call your “tax home.” Of course, there is a small condition: you must ensure you set foot in Paraguay at least once a year. While this sounds simple, this small detail has its trick: the calendar in Paraguay doesn’t always work in your favor (ask us on WhatsApp), and it’s better to be cautious to avoid losing your residency over a one-day difference.
On the other hand, permanent residency is like having a VIP pass. Once you have it, it’s yours. You only need to renew it once every ten years (if you haven’t obtained a passport), and of course, no more calculating annual visits; now it will be every three years. For the past couple of years, obtaining permanent residency has involved meeting certain requirements (like a small investment if you go the investor route), but the effort is worth it, especially if you know you want to stay long-term.
Benefits of Opting for Permanent Residency from the Start in Paraguay
Well, the main advantage is that you won’t be subject to the ups and downs of changing immigration policies over time. Paraguay, with its territorial tax system and expatriate-friendly approach, is one of the few places where having permanent residency means having a solid foundation for any future plans.
How to Obtain Residency in Paraguay – Temporary
The process remains accessible, especially for those seeking residency options without high financial requirements. Starting in 2024, applicants must provide a series of apostilled documents, including a passport, a criminal background check, and a birth certificate translated into Spanish.
The application must be made in person at the immigration offices in Asunción, and the estimated time to obtain the temporary residency card is around 40 days. Subsequently, it is mandatory to make a second visit to process the Paraguayan identity card, as currently, it is not allowed to do so simultaneously.
Key Considerations and Benefits of Temporary Residency
Temporary residency allows foreigners to access financial services, such as opening bank accounts and acquiring property. Another recent benefit is the flexibility to justify absences of up to 12 months if the minimum requirement of visiting Paraguay once a year cannot be met. Additionally, Paraguay’s membership in MERCOSUR opens doors for developing businesses and trading freely in other countries in the region, attracting both digital nomads and investors with regional interests.
Permanent Residency by Family Ties: Simplification for Qualified Candidates
If you have a direct connection to Paraguay, this option is the fast track to obtaining permanent residency without needing to make investments. For those seeking a more direct and economical alternative, this type of residency is an excellent gateway to the country.
Requirements for Family Ties
Obtaining permanent residency through family ties in Paraguay is quite straightforward as long as you have a direct familial relationship with a Paraguayan citizen. This includes cases such as:
- Marrying a Paraguayan citizen.
- Being the child of a Paraguayan citizen, regardless of your place of birth.
The advantage of this option is that it does not require investments or proof of financial solvency. You simply need to present documents that prove your family relationship, such as a marriage certificate or birth certificate, apostilled and translated into Spanish. A criminal background check is also required to demonstrate a clean record, as is the case with other types of residency.
Permanent Residency for Investors: A Path for Entrepreneurs
If you are considering doing business in Paraguay, permanent residency for investors is the perfect route. This option allows foreigners to settle permanently, as long as they commit to making an investment in the country. In simple terms, Paraguay opens its doors to you, provided you are willing to contribute to its economy.
Minimum Investment Requirement of USD 70,000
To apply for permanent residency as an investor, the first requirement is to make a minimum investment of USD 70,000 in a legitimate business within the country. This doesn’t mean you have to disburse all the money immediately; instead, you need to demonstrate that you have the funds available for investment. This amount can be deposited in a Paraguayan bank account in your name as proof of solvency, allowing you to execute the investment plan within six months after approval.
Accepted Types of Business and Flexibility in the Business Plan
One of the key advantages of this option is flexibility. Paraguay does not require your business to belong to a specific sector; you can invest in whatever best suits your interests and experience. From opening a restaurant in Asunción to investing in technology, real estate, or even agriculture, practically any sector is welcome, as long as the business is legitimate and operational. This flexibility allows many foreign entrepreneurs to find the right niche for their projects.
When presenting your application, you will need to create a basic business plan explaining how you intend to invest the USD 70,000. You don’t need a lengthy document; just a clear proposal indicating the type of business, basic projections, and, if possible, the positive impact it will have on the local economy. Here’s a little secret: although the primary goal of this type of residency is to stimulate job creation, authorities are not usually strict about the exact number of local employees you must hire.
Step-by-Step Process to Obtain Permanent Residency in Paraguay
Having covered the requirements and advantages of permanent residency for investors in Paraguay, let’s dive into the step-by-step process to obtain it. Here’s a practical guide to take you from idea to result, ensuring you don’t miss any details on your path to residency.
Step 1: Obtain the Investor Certificate and Prepare the Business Plan
The first step is to prepare and present a basic business plan that outlines how you plan to invest the USD 70,000 in Paraguay. It doesn’t have to be an ultra-complex plan; simply specify your business idea, estimate the necessary resources, and, if possible, include the potential economic impact. This plan must be approved for you to receive the investor certificate, which is the official document that allows you to apply for residency as an investor.
If you are outside the country, it is possible to carry out much of this process remotely by using a power of attorney. This simplifies the process and allows you to start the paperwork without the need to travel immediately.
Step 2: Residency Application and Waiting Times
Once you obtain the investor certificate, you can proceed with the application for permanent residency. For this, you will need to submit additional documentation, such as your passport, criminal background check, and other personal documents, all translated and apostilled. Waiting times vary but typically range from 45 to 60 days. However, given that this is a process in Paraguay and generally in Latin America, it’s wise to prepare for possible delays. On average, the complete process for obtaining the identity card may take a bit longer due to the high demand for applications.
Step 3: Obtain the Paraguayan ID and Permanent Establishment
The final step is to receive your Paraguayan identity card. This document officially makes you a permanent resident of Paraguay, granting you full access to benefits such as opening bank accounts, acquiring real estate, and, of course, taking advantage of the tax benefits that Paraguay offers. To obtain the ID, you will need to return to the country approximately 45 days after applying for residency, as this step requires an in-person visit to collect the document.
Establishing yourself as a resident in Paraguay, opening a business may be the next logical step, especially if you seek to take advantage of its fiscal and economic benefits. Paraguay offers two main legal structures for businesses: the Simplified Joint Stock Company (EAS) and the Corporation (SA). Each has its own characteristics and benefits, so choosing the most suitable one will depend on your business goals and the level of formality you wish to give to your business.
Differences and Benefits of Each Legal Structure
Simplified Joint Stock Company (EAS): The EAS is a structure designed to facilitate the process of creating businesses. It is a flexible and low-cost option, ideal for small entrepreneurs and those looking to start without too much administrative complexity. An EAS can be formed by one or more partners and allows for more agile management with fewer procedures than an SA. The flexibility of the EAS makes it one of the most popular options among those looking to start quickly in Paraguay without a overly formal corporate structure.
Corporation (SA): The SA is a more formal and robust structure, generally preferred by larger companies or those planning to expand in the future. In an SA, a minimum of two shareholders is required, and although the incorporation process may be longer and more costly, this structure offers greater credibility and long-term stability. It is ideal if your business has external financing needs, as an SA facilitates attracting investors and partners.
Corporate Taxes and VAT in Paraguay
Paraguay has become an attractive destination for entrepreneurs and investors due to its friendly tax system, which includes a low corporate tax rate and competitive VAT. If you are considering establishing your business in the country, these factors are crucial to maximize the benefits of the Paraguayan tax environment.
Corporate Tax of 10% and Benefits for Entrepreneurs
The corporate tax in Paraguay is 10% on net profits, one of the lowest rates in the region. This tax policy aims to attract foreign investment and foster the growth of new businesses, allowing entrepreneurs and small companies to retain a larger portion of their income. Additionally, Paraguay offers a simplified regime option for small businesses, where a 3% tax on revenue applies, further facilitating the development of smaller-scale enterprises.
VAT in Paraguay and Comparison with Other Countries in the Region
The Value Added Tax (VAT) in Paraguay is also 10% for both products and services, a competitive rate within Latin America. Compared to countries like Argentina, where VAT is 21%, or Brazil, where it can reach rates of up to 25%, Paraguay positions itself as a tax-friendly destination. This 10% VAT applies to all local transactions, allowing for a balance between state revenue and operational costs for companies selling in the Paraguayan market.
Conclusion: Paraguay, a Tax Haven in the Heart of South America
Paraguay presents itself as an attractive destination for those seeking a life with low taxes, financial freedom, and a friendly business environment. Its territorial tax system, the 10% corporate tax, and the competitive 10% VAT make it a magnet for expatriates, entrepreneurs, and investors looking to establish themselves in an emerging and favorable economy.
If you are interested in taking advantage of the tax benefits and simplifying the process of residency or business registration in Paraguay, we are here to help you. Don’t hesitate to consult us; we will guide you through each step to ensure that this transition is as smooth and advantageous as possible.
